Weekly Reports | Jan 16 2018
-Kazatomprom uncertainty dominates spot uranium market activity
-Overall trading volumes thin
-Analysts maintain uranium prices remain too low
By Rudi Filapek-Vandyck
The global uranium market remains in limbo with market participants trying to figure out what exactly are the plans at Kazatomprom regarding an announced -20% cut in uranium production for the next three years, and what will be the consequences worldwide?
Kazatomprom is the national operator of Kazakhstan for import and export of uranium, rare and rare-earth metals, and nuclear fuel components for power plants. Kazakhstan is the world's largest source of uranium, roughly supplying twice as much as Canada and 4.5 times as much as Australia per annum.
On 4 December last year, the Kazakh producer announced it will reduce production by -20% for the next three years. Common perception suggested this meant -20% less from 2017 output, but the company later clarified the reduction will be from previous "projections". Nobody outside Kazakhstan knows what these prior projections were.
Industry consultant TradeTech reports such confusion is keeping potential buyers on the sidelines. The direct result, as one would expect, has been sluggish volumes in spot market activity as the calendar switched 2017 for 2018.
Tepid Volumes Into 2018
For the week ending Friday, January 12th, TradeTech registered a total of five transactions involving less than 500,000 pounds U3O8. Buyers included utilities and traders, with traders acting as sellers. According to the consultant, sellers are convinced market fundamentals are strong and the Kazakh reduction will further strengthen fundamentals, irrespective of exact details.
Analysts have been suggesting for a while that uranium prices are simply too low and, in order to keep a well-supplied market longer term, the price must move substantially higher.
For the week, TradeTech's weekly spot price indicator fell by -10c to US$23.65 per pound U3O8. Last time we updated in mid-December, the reference price was US$0.95 higher at US$24.60. On January 5th, the corresponding price stood at US$23.75. In early December, the spot price reached as "high" as US$26.50. Back in 2006 it peaked at US$236-238 per pound.
Since the Fukushima disaster in 2011 the price of uranium has fallen by -65%.
In the term uranium market, TradeTech reports one non-US utility is now evaluating offers received on December 28, in response to a request seeking offers for approximately 1m pounds U3O8 per year for two, five-year periods beginning in 2020 and extending through 2029.
TradeTech's mid-term U3O8 price indicator sits at US$28/lb, unchanged from December 31st, while the long-term price indicator sits at US$31/lb, also unchanged from late December.
Note the latest price changes are not reflected in the chart below.
Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.
